In a sign of the shifting dynamics of the videogame industry, the market capitalization of GungHo Online Entertainment Inc. – known for its addictive mobile Puzzle & Dragons game – surpassed on Monday that of Nintendo Co., which has ruled the industry for three decades with its iconic titles such as Super Mario Bros. and Pokemon.

The market cap changes reflect a broader shift in the videogame industry. Nintendo has been the reigning king of the videogame industry with its fun and clever games playable on its own hardware systems. With the growth of smartphones and tablet computers, more consumers are opting for games on those devices instead of dedicated game machines. Games like Puzzle & Dragons are free to play, but they generate revenue by tempting users to make in-game purchases of weapons or characters to ease game play.

Puzzle & Dragons – a game that combines a Tetris-like puzzle with card-battle game elements – is a phenomenon. The game has snared 13 million users in Japan in less than 15 months, helping GungHo’s total sales grow ninefold in the January-March quarter from the same period a year earlier and raise its quarterly net profit 54-fold. For 11 straight months, the game has grabbed a million new users in Japan.

The game is so popular that Google Senior Vice President Andy Rubin, developer of the Android mobile operating system, jokingly said last month at an event in Tokyo that Puzzle & Dragons traffic was enough to threaten toppling Google’s payment settlement system every month.

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Japan Real Time is a newsy, concise guide to what works, what doesn’t and why in the one-time poster child for Asian development, as it struggles to keep pace with faster-growing neighbors while competing with Europe for Michelin-rated restaurants. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, the site provides an inside track on business, politics and lifestyle in Japan as it comes to terms with being overtaken by China as the world’s second-biggest economy. You can contact the editors at japanrealtime@wsj.com